RAW is just that- the camera captures what the sensor sees, without adding any corrections (saturation/sharpness etc).

RAW files can then be opened in software to allow for corrections in White Balance, color saturation, brightness, sharpness, etc without adding artifacts to the picture.

Once a RAW file has been "adjusted" it can then be converted to TIFF/JPEG/whatever file format the software allows. A RAW file converted to JPEG will almost always look better that a JPEG straight from the camera.

RAW files, if they are compressed, usually use a lossless compression algorithym, unlike JPEG- which "looses" a portion of the picture detail to make the file smaller.

I like to think of RAW as being like film- what the sensor sees is what you gets. Except you can change it later (pretty much without penalty) if you want.

RAW is the best format if you plan on making high quality prints or editing the picture for a publication or other reason. There is a trade off on space. Basically if you are just taking pics to take pics, then your highest quality jpeg setting would probably be fine for you.

However if you are taking pics and getting paid for it your are best to start in RAW format.

i find that RAW gives my photos a more "rustic" look and feel to it .. for objects and out of studio people shots, its looks pretty good ... but for my studio people shots ... its too "RAW" looking for me .... i find that the SHQ jpeg setting gives me a cleaner look

Print quality really has nothing to do with RAW format. Am I right on this?
I understand it as Jim does, Raw is like a film negative allowes you to process and change images' WB and exposure value. All the data is on it and therefore the software can change it. That is the only advantage to RAW. I use Raw only when light situation is challenging and I am not sure I can get the correct exposure. Other wise I shoot JPG lowest compression i.e fine. Before I begin to manipulate the image, if I do, I change to TIFF. In jpg each save after manipulation deteriorate the image quality. I archive and print all my images in TIFF. Print quality has to do with resolution, and file size. Which format it is in matters only from a software compatability point of view.

As was mentioned above, RAW is a lossless format while JPG, even at lowest compression, is lossy. So if you convert JPG to TIFF right out of the camera you've already lost some data that you'll never get back. This might not matter on smaller print size, but if you're looking at large prints RAW will offer superior quality.

Another major difference is the post-processing. With JPG you set the camera to process the image, taking your chances that the white balance and exposure are correct (or close enough, if you're good with Photoshop). With RAW you get exactly what hits the CCD/CMOS, with no onboard editing. This means you have to be prepared to to develop a RAW workflow to cope with images once they're out of the camera and onto your hard drive. Regarding the comment that RAW files offer a "rustic" look I would hazard a guess that you're not doing much beyond converting the files from RAW to TIFF or JPG. You need to also consider the fact that most cameras do some onboard sharpening to JPG files, while RAW files come out of the camera much softer and do require sharpening (but with all the extra pixel info they sharpen up amazingly well).

Another advantage of RAW is the wider tonal range that seems to get captured. It is much easier to pull "lost" detail out of shadows in an image shot RAW. This is most easily done during conversion, and I find Capture One DSLR Pro (supports only digital SLRs) the best but you can also use the Adobe Camera RAW (ARC) available as a plugin for Photoshop 7 or included with Photoshop CS, or the software that came with your camera.

The advantages of RAW are superior image quality and increased latitude in post-processing outcomes.

The disadvantages are longer write time to memory card, larger file size (I only became a 100% RAW shooter when I acquired some 1gig CF cards), increased post-processing requirements.

If you just need a quick photo go with JPG, but if you want the best image possible I have to put my recommendation behind RAW.